For the average observer, the unfolding world economic crisis offers some bewildering paradoxes: untangling them however, helps give a clearer picture of the true state of play.

The eurozone may be in crisis but the euro remains strong.

Ratings agencies, say the critics, are punishing some countries but sparing others whose economies are equally weak.

And never the mind that Japan has the biggest debt burden among industrialised nations as a proportion of Gross Domestic Product -- investors are still backing the yen.

First the euro, which is still strong against the dollar even as Greece is on the brink of a debt default despite a second international bail-out.

Italy and Spain meanwhile are being forced to borrow at unprecedented rates on the markets, threatening to force the eurozone's third- and fourth-largest economies into a debt bailout.

The reason the euro remains strong is that the dollar has never been so unattractive to investors. US growth slowed perceptibly at the beginning of the year and analysts have voiced fears of a recession in the second half.

The US Federal Reserve's programme of injecting money into the economy, known as quantitative easing, has weakened the dollar since it began. Its recent end has stoked concerns of a recession.

That explains why the euro is strong against the dollar. In contrast however, it is weak against the yen and the Swiss franc, two currencies seen as safe havens.

Ratings agencies Moody's, Standard & Poors and Fitch have all been applying pressure to the most fragile of the eurozone economies, while sparing some equally indebted economies the same harsh assessments.

To look at the reports from S&P, Greece would appear to be the world's most unstable economy with a debt burden that comes to 152 percent of its GDP. Jamaica, with a hefty debt burden of 137 percent gets a far better rating.

But the ratings agencies are still smarting from the roasting they got for failing to sound the alarm before the US sub-prime crisis that triggered the last global recession.

This helps explain why this time they have taken a stricter line with the eurozone economies -- all the more so given that the prospect of Greece defaulting is no longer being spoken of in purely hypothetical terms.

The voluntary restructuring of part of Greece's debt by some private creditors planned under its second bailout is considered a selective default by the ratings agencies -- and that is why the ratings agencies have downgraded its rating.

For the critics however, the ratings agencies are part of the problem.

An agency's negative assessment is effectively a self-fulfilling prophecy, they argue: for by downgrading a country's rating, they make it harder for them to borrow their way out of trouble.

The final paradox is that despite Japan's serious economic problems, investors are still rushing to buy the yen, to the point that the currency has reached its highest levels since 1945.

The strength of the currency seems to be totally at odds with the economic reality in Japan.

Japan even took steps Thursday to weaken the yen in an effort to help safeguard the nation's post-quake recovery after the currency's recent surge.

But the currency has always enjoyed the status of a safe haven for investors, even more so when economies are struggling.

And even if Japan has the world's highest debt burden -- running at a staggering 252 percent of its GDP -- it is to a great extent financed by the savings of the Japanese.

But the strength of the yen has threatened Japan's economic recovery, still struggling to recover from the effects of the March 11 earthquake, tsunami and nuclear disasters.

That perfect storm of calamities meant some of Japan major export industries, such as the automobile industry, lost a great deal of money: and a strong yen just adds to their troubles.

But most observers think the government's intervention to weaken the currency will have only a limited effect.

Then there is another problem: not so much a paradox as a circle that needs to be squared.

For at a time when growth is slowing on both sides of the Atlantic, the governments of the United States and the eurozone countries are pursuing austerity programmes that involve tough cuts in public spending.

Tightening the purse strings is not going to help launch the economic recovery -- but their debt burdens are threatening to overwhelm them and the ratings agencies are pressing them to cut their deficits.

So they are left with the difficult task of stimulating a recovery without increasing public spending.

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